How much for the rooftop space?

How much for the rooftop space?

The Upper Tribunal (“UT”) has considered an application under the 2017 Electronic Communications Code in the case of EE Ltd and another v London Borough of Islington [2019] UKUT 53 (LC).

2017 Electronic Communications Code (“Code”)

The Code came into force on 28 December 2017 and introduced a number of changes to the way that operators may use statutory rights to install electronic communication apparatus on land. Rights to be granted to an operator may be reached by agreement with the owner of land or by an agreement imposed by the Court. This case offers a useful insight into what form of agreement the UT can impose and the approach in respect of consideration and compensation payable to land owners under the Code.

Facts

EE Ltd (“EE”) wished to install electronic communication apparatus on a block of flats owned by London Borough of Islington (“LA”). Agreement could not be reached between the parties and the UT granted interim Code rights to EE as well as setting out directions for the draft agreement to be negotiated between the parties. The LA did not comply with these directions and as a result, the UT decided that the LA was not able to object to the terms of the agreement other than the consideration, compensation and to query whether the UT had the ability to impose a lease on the two parties involved.

Decision

Form of Agreement

The UT imposed a lease with a 10 year term. The UT pointed out that there is no restriction in the Code as to what form of agreement may be imposed by the UT on the parties and different scenarios may result in different agreements being imposed depending the facts in each scenario. Furthermore, there was nothing to prevent agreement being reached between parties for a lease to be put in place.

Consideration

The UT applied the valuation criteria set out in the Code. These include an assumption that the Code rights do not relate to the provision or use of an electronic communications network (i.e. a “no network approach”).

EE asserted that the rooftop space had no other use other than for electronic communications equipment and therefore, the consideration should be minimal. The LA argued that that there is a minimum level of consideration below which no owner of land would enter into an agreement. The UT rejected the LA’s argument saying that both a willing buyer and seller had to be willing to deal at market price. The UT did however recognise that any obligations on the part of the LA had to be taken into account, for example agreeing to maintain common parts of the building etc. and for this, EE was obliged to pay consideration for the rights.

The UT decided that the nominal value of the rights granted was £50.00 but the consideration willing parties would agree for the terms was £1,000.00. The sum specified in the agreement was to be £2,551.77, the amount which EE had proposed.

Compensation

The UT may order compensation for loss or damage (for example expenses, reduction in land value).

The UT held that the LA was entitled to reasonable legal and surveyors costs and costs for use of a temporary compound by EE. The LA was not entitled to any compensation for the reduction in the value of land. The UT asserted that in the event that the value of the land was reduced owing to the rights granted, this should be reflected in the “Consideration” and not “Compensation”. However, the UT did acknowledge if the value of the land is diminished to a greater degree than as reflected in the consideration imposed, a distinct claim may be allowed.

Conclusion

This case offers a really useful insight as to how the UT is likely to approach assessments of consideration and compensation under the Code. It is clear that the “no-network” assumption is likely to result in a lower valuation when agreements are imposed by the UT and therefore, it is likely to be in the interests of land owners to try and reach agreement on an acceptable level of consideration by agreement with an operator without the Court having to impose an agreement. That said, this is the first case to consider these key interpretative issues under the Code and it is likely that further cases will come before the UT and the Courts in the near future.

Posted on: 14/03/2019

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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